Oh Dear What Can The Matter Be? Up Or Down Home Prices 2017?

(January 18, 2017)

Our real estate group are asked two questions dozens of time per day, "are real estate prices decreasing or increasing in 2017 and do aliens exist?" Well baring further acts of draconian interventionism by all levels of government or a massive comet impacting earth and destroying all life here is where we are at.

Time will tell if the near constant dire real estate crash forecasts by every single media outlet (as they have year after year) and the market manipulation by the political illuminati will have their desired affect on your home values.

You made have heard there was a recently released report predicting an 8.5 per cent drop or was it 85% in home prices in 2017 across Metro Vancouver?

It also indicates the market decline would likely be worse if not for the “remarkably resilient” urban condo sector, which offers more affordable prices, and the region’s nation-leading economy assisted by further pre election government intrervestionism.

“It is expected that Greater Vancouver will experience a near double-digit correction in the new year, as sanity returns to the marketplace, causing the region to give back much of the appreciation witnessed in the first half of 2016,” said the report penned by yet another "expert."

“However inventory will continue to be the story in the new year, as any movement within the market will be exaggerated at their current, extremely low levels, meaning that if sentiment remains unchanged, conditions could worsen and prices may fall even further.”

The report also predicts foreign investment in Metro Vancouver will wane further due to the foreign buyers’ tax and China’s imposition of new, stricter requirements on currency conversions.

The Fraser Valley and especially Langley, South Surrey, Surrey and Abbotsford however remain a desirable place for homebuyers, which could affect prices in a positive way. Have you seen first hand the number of townhouse developments underway in these cities?

Langley saw aggregate home prices rise 25.7 per cent to end the year at $786,720.

While markets in pricier parts of Metro began to struggle in the latest quarter, the report says many buyers were drawn east to areas throughout the Fraser Valley including Langley in search of affordability, resulting in more sales and competition over listings.

Urbanization phenomenon?

Environmental designer Erick Villagomez with Metis Design-Build says, broadly speaking, the urbanization process seem to be a current worldwide phenomenon.

“So, in the absence of any specific global ‘events’ that could interfere with the current trends, one can assume that over the long-term real estate will continue to increase in all successful urban centres — including the Lower Mainland,” he said.

Villagomez doesn’t believe the real estate bubble will burst.

“All other things being equal, it (rising real estate prices) has been continuous for the past three decades, over which time many have predicted the ‘bubble bursting.’”

Demand will lower, says TWU prof.

Meanwhile, a Trinity Western University economics professor foresees the real estate market in Metro Vancouver continuing to cool over the next two to five years.

Sung Min Yoo, Associate Professor of Economics at TWU’s School of Business, said while it’s “extremely difficult” to forecast interest rates, he believes they will increase in the near future.

“With higher interest rates, the mortgage rates will be also higher,” he said. “From that perspective, demand for housing will be much lower over the next two to five years.”

Before the foreign buyers’ tax took effect in August and created a cooling effect on the market, the price of real estate in Langley and across Metro Vancouver and the Fraser Valley skyrocketed.

As a byproduct of the hot summer market, B.C. Assessment said the typical increase in property assessments was 30 to 50 per cent, depending on the neighourhood and other factors, for detached houses in most urban parts of Metro Vancouver and the Fraser Valley.

And some homes have seen increases well over 50 per cent.

Yoo said two key factors led to the extreme price jumps in the Greater Vancouver area over the past two years.

“The first factor is an extremely low interest rate, which is translated into extremely low mortgage rate,” he offered.

“With such an extremely low mortgage rate, many home buyers could pay relatively reasonable monthly payments, even though the housing price was extremely high.”

That, he said, caused an increased demand for housing and a “huge appreciation” in housing prices.

The second factor, he said, was the increase in foreign demand for housing in Greater Vancouver area, prior to the introduction of the foreign buyer tax affecting real estate transactions in Metro Vancouver.

“A significant portion of this foreign demand was from China. Since the Canadian dollar has depreciated (over the) last few years, the cost of buying (real estate) in Greater Vancouver in terms of foreign currency has not increased significantly even though housing prices in Greater Vancouver area has increased significantly in Canadian dollars,” Yoo said.

“This increase in foreign demand was another major factor.”

While Yoo said it is very difficult to predict what will happen to foreign demand for housing in Greater Vancouver area but noted, “it is expected that the foreign demand would be reduced over time.” However, metro Vancouver is predicted to house the worlds largest Chinese population oustside of mainland China over the next twenty or so years so don't expect that to change.

Of great concern is the constant draconian interference and manipulation by all levels of far left government from local, provincial to federal in all things related to home ownership. It is a testament to the resilience and passion by the residents and homeowners of our tremendous province that we are doing as well as we are under the massive burden of taxes, regulation and debt. In our opinion, government would serve it's constituents much better if it stayed out of our way and our of our wallets. Stick to selfies and photo ops.

If you or anyone your know are considering the purchase or sale of your home or any of our precious real estate don't hesitate to call, email, text or socialize with our group anytime, coffee is on us, 604-767-6736.

This representation is based in whole or in part on data generated by the Chilliwack & District Real Estate Board, Fraser Valley Real Estate Board or Real Estate Board of Greater Vancouver which assumes no responsibility for its accuracy - Listing data updated on June 6, 2020.